Companies started offering their workers help to pay off this debt over the last 10 years as a way to give them a recruitment and retention edge against other employers, Human Resource Executive reports. Prior to the start of the pandemic in 2020 there was an expectation that up to half of employers would provide student loan debt assistance for their employees for the upcoming decade. Those efforts, however, experienced a big decline when the federal government paused loan payments during the pandemic and following Biden's push for student loan forgiveness.
“[Biden’s proposal] put the brakes on employers’ student loan assistance plans, given everything that was happening with student loans at the time,” said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute.
At the end of July, the Biden administration launched a beta website for a new income-focused student loan repayment plan as part of its pledge to find ways to help after the Supreme Court ruling, CNN reports. Copeland does sees an opportunity for employers to make student loan relief a priority again. A 2021 survey by his group revealed that 17% of employers offered student loan assistance and that 31% were planning to offer it.
“There was all that pent-up interest in it before COVID, before we had the forgiveness and forbearance of payments, that now we better address this,” he noted. “This problem didn’t go away, it was just kind of pushed off for a while. Now it is going to come due. Now is the time that we really need to help our employees."
The end of the U.S. Department of Education’s COVID-19 relief for student loans means that interest on those loans becomes effective on the first of next month with the first due date in October. The Society for Human Resource Management agrees that the Supreme Court’s ruling may encourage employers to step up their own efforts to help workers burdened by student loan debt. “To recruit and retain a first-class workforce, employers need the flexibility to offer benefit packages that fit the needs of their employees. Educational assistance is one such tool,” SHRM noted in a statement.
Additionally, SHRM is urging federal and state legislators to enact policies that can support employers with such a benefit. “This includes raising the limits on tax-free, employer-provided education benefits; permanently allowing employers to provide tax-free student debt relief to their workers; and making it easier to implement these benefit programs,” the statement reads.
While student loan repayment benefits are very popular with employees, SHRM’s 2023 Benefits Survey noted that only 8% of companies offer such a benefit. The survey was released in June.
Plan sponsors, or those charged with setting up a healthcare or retirement plan for their company’s employees, will need to “show up,” Monica De Agostino, the human resources manager at MRIGlobal, a nonprofit scientific research institute in Kansas City, Missouri, told Plan Sponsor. “With payments and interest resuming soon on federally held student loans, employees burdened with student debt face upcoming financial challenges,” De Agostino said. “As a plan sponsor, we have a unique opportunity to demonstrate our commitment to the financial wellness of our employees and alleviate the stress associated with student loans.”
About 40% of employers that do provide student loan assistance do so by allowing employees to borrow from their 401(k) accounts to make payments, CNBC reports.
Edward Gottfried, director of product management at Betterment at Work, said the Supreme Court ruling has pushed student loan assistance “at the forefront of benefits discussions,” CNET reports.
Betterment, which oversees student loan benefit solution for companies, found in its research that 57% of workers think their employers should help them pay down their student loans. That research also notes that 85% of employees would ditch their jobs for another that did offer such a benefit. “Companies that want to stand apart from the pack and show workers they care about alleviating financial burdens should consider exploring new and innovative benefits they can offer to support borrowers," Gottfried said.